Melbourne mid-winter market pause to be tested by first home buyers

Home auction numbers will be well down in Melbourne this weekend as the quieter July market commences with the usual mid-winter distractions for buyers and sellers.

Melbourne will host just over 700 auctions this Saturday which will be well down on last weekend’s 913 listings but well ahead of the 208 auctioned over the same weekend last year which was in pause mode due to Federal Election Day.

Melbourne’s west continues as clearly the most popular region for Melbourne auctions this weekend with 164 homes set to go under the hammer.  Next highest is the north east with 106 followed by the outer east 91, the inner city 78, the inner south and the north each with 73, the inner east 58 and the south east with 54 auctions listed.

Reservoir returns as the most popular suburb for auctions in Melbourne at the weekend with 14 followed by Parkville 12, Mount Waverley and Richmond each with 11, Werribee 9 and a number of suburbs with 8 auctions listed including Hawthorn, Hoppers Crossing and Pascoe Vale.

The Melbourne weekend auction market continues to fade reflecting the usual moderating impact of increasingly distracted mid-winter buyers and sellers

Melbourne reported a clearance rate of 72.7 percent last weekend which was lower again than the previous weekend’s result of 75.3 per cent but still higher the 71.7 per cent recorded over the same weekend last year.

Last year’s winter market was influenced by official interest rate cuts in May and August that acted to bolster overall activity. This year’s winter market is however normalising by contrast with typically lower activity before the usual spring revival. This may however be short-lived with the likelihood of a surge in first home buyers in July set to re-stimulate the market.

Inner city and eastern suburban areas were again the predictable winter under-performers last weekend although the inner south bucked the trend with a strong result.

Significant changes to the stamp duty payable by Victorian first home buyers will come into effect this Saturday. First home buyers will be exempt from paying stamp duty for purchases of both new and established homes with a sale price of up to $600,000.

First home buyer activity in Victoria has been significantly subdued over the past year as steep price rises particularly in Melbourne has sidelined many despite record low interest rates.

Latest ABS data reveals that just 1850 first home buyer loans were approved in Victoria over April which is the lowest monthly total since January last year. First home buyer activity accounted for just 9.4 per cent of all residential lending approved over the month which is the lowest market share on record and well below the long-term average of 14.9 per cent.

Stamp duty relief for first home buyers will likely result in a surge on activity from this group keen to take advantage before prices inevitably rise from this boost to demand.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.